ATN International, Inc.

Good day, and thank you for standing by. Welcome to the ATN International Q1 2024 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You'll then hear an automated message that advises your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michelle Citrowski, Corporate Treasurer and Head of Investors.

Please go ahead. Thank you, Operator, and good morning, everyone. I'm joined today by Brad Martin, ATM's Chief Executive Officer, and Carlos Doglioli, ATM's Chief Financial Officer. This morning, we'll be reviewing our first quarter 2024 results and providing additional insights on the 2024 outlook. As a reminder, we announced our 2024 first quarter results yesterday afternoon after the market closed. Investors can find the earnings release and conference call slide presentation on our investor relations website. Our earnings release and the presentation contain certain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operations. These statements are subject to risks and uncertainties that could cause actual results to differ material from those described. Also, in an effort to provide useful information for investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliations to comparable gap measures, and for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at atni.com or the 8K filing provided to the SEC. And now, I'll turn the call over to Brad.

Thank you, Michelle. Good morning, everyone, and thank you for joining us. The ATN team remains focused on advancing our first-to-fiber and glass-and-steel strategies to enhance our fiber-rich digital infrastructure and next-generation fixed wireless capabilities, positioning ATN to capture the growing demand for high-quality broadband in the remote and rural markets that we serve. Although we saw growth in key operational metrics year-over-year resulting from the strategy, our first quarter financial results were softer than expected. I'll begin by briefly covering the dynamics from our first quarter and a revised outlook for the year. Then I will outline our progress executing our strategy before turning the call over to Carlos to review our first quarter financials and revised 2024 guidance in more detail. Starting with our first quarter results. Our first quarter revenue was up 1% and adjusted EBITDA was down 3% versus the prior year quarter. Our US telecom segment performance was impacted by delays in major carrier services projects and weaker than expected business revenue. These dynamics impacted our domestic segment's first quarter results and full year outlook. The U.S. shortfall was partially offset by solid performance in our international segment, where revenue and adjusted EBITDA grew 3% respectively, as we grew high-speed broadband services and business customer revenue. Today, we are lowering our guidance to reflect the softer than expected first quarter results, as well as our current expectations for the balance of the year. which has been impacted primarily by two factors. First, while now we have line of sight to the U.S. carrier services projects moving ahead, the delayed delivery timing will result in some of the previously forecasted revenue moving out of 2024. Secondly, we secured fewer new business contracts for major government program in the first quarter. We expected a higher win rate, and we expected these contracts would help offset the step down in the Emergency Connectivity Fund program that expired at the end of the first quarter, as we have previously signaled. In response to these dynamics, we are sharpening our focus on managing operating and capital costs, which Carlos will speak to further in his remarks. Additionally, we are accelerating our efforts to bring in revenue opportunities in the second half of the year. We've built a strong sales pipeline and believe our expanded and upgraded network positions us to convert these opportunities. Additionally, we recently brought in several key leadership hires that add further telecom and operational expertise to the team. This includes several new operational leaders and new commercial leadership in our domestic markets. These talented additions further reinforce our ability to convert growth opportunities and efficiently operate our business. Now turning to strategic and operational updates. We remain focused on our first to fiber and glass and steel strategies to strengthen ATN's market position and enable ATN to grow high-speed data subscribers, increase recurring revenues, expand free cash flow, and deliver value creation for our shareholders for years to come. The future of telecommunications is high-speed data connections and gigabit class solutions, whether through fiber or fixed wireless. This is why, for the past two years, we have been investing in the enhancement of our high-speed networks reach and capabilities above historical CapEx levels. These investments have continued to yield growth across several key operational metrics. Notably, at the end of the first quarter, we've increased broadband homes passed by high-speed data by 28% and grew high-speed broadband customers by 12% when compared to the year-ago period. We also continue to maintain high levels of customer retention. Replacing and decommissioning legacy copper networks with fiber networks remains a key strategy as well. Fiber's many advantages position ATN to deliver high margins over time. We exited the first quarter with 1,692 fiber route miles, a 5% year-over-year increase. We also increased our fiber homes past footprint by 19%. Now taking a closer look at operational highlights by segment. Starting with our international segment, which represents about half of ATN's revenue. Across this segment, We continue to see a rapid uptake of high-speed broadband with high-speed data subscriber growth of 11% year-over-year. Another bright spot and area that we have targeted for growth is revenue for international business, which is up approximately 13% year-over-year. Turning to our U.S. segment, which accounts for the other half of ATN's revenue. In the U.S., we're focused on building out our digital infrastructure to support the evolving needs of our carrier customers, while also expanding our fiber network to bring fiber-fed high-speed data services to underserved rural markets. Although we experienced some delays in major carrier services projects in the first quarter, we continue to achieve several important operational milestones in our U.S. markets. At the close of the first quarter, we increased broadband homes passed by high-speed data by 75% year-over-year to over 131,000 homes. This expanded footprint represents an opportunity for ATN as we focus on leveraging our assets to increase the market penetration and grow our business. Moving on to an update on grant funding. In the US, grant funding remains key to our strategy. While no new grants were awarded in the first quarter, we continue working off past grants awarded Since the start of 2023, ATN and our partners have secured a total of $91 million of grants and subsidy funding in the U.S., on top of the $155 million for the 2022 year. These funds will support our continued debt expansion and customer revenue growth, even as the pace of our self-funded capital expenditures decrease as planned. Regarding BEAD, Although some states have delayed their planning, we remain ready and well positioned to compete for funding as opportunities come to fruition in our operating states. And finally, we want to comment on the Affordable Connectivity Program. Our exposure to ACP remains minimal at approximately 15,000 subscribers, and we continue to action mitigation plans. Like others in the industry, we experienced earlier than anticipated shifts in customer purchasing decisions ahead of the program's expiration. The impact is expected to be minimal to ATN's revenue and net neutral on our profitability, dynamics that are reflected in our revised guidance. Before turning the call over to Carlos, I want to reiterate our priorities for 2024, which include accelerating efforts to close incremental revenue opportunities in the pipeline that leverage our expanded and upgraded network, growing our high-speed network subscriber base further expanding our fiber footprint through targeted internally funded investments, albeit at a reduced level. Leveraging the grants we have already been awarded while pursuing further economically viable grant funding to augment internal investments in the future. Advancing margin improvement initiatives along with executing a broad range of cost reduction actions to align our cost structure and improve operating leverage. And finally, prudently managing our balance sheet with the goal of lowering our leverage over time. And with that, I'll hand the call over to you, Carlos.